Singapore Home Prices Rise at Slowest Pace in Six Quarters

A woman looks out of a balcony at Marina Bay Residences in the central business district of Singapore. Photographer: Nicky Loh/Bloomberg

Oct. 1 (Bloomberg) -- Singapore home prices increased at
the slowest pace in six quarters after the government introduced
new loan measures to cool prices in Asia’s second-most expensive
housing market.

The island-state’s private residential property price index
rose 0.4 percent to a record 216.2 points in the three months
ended Sept. 30, after it climbed 1 percent in the second
quarter, according to preliminary figures released by the Urban
Redevelopment Authority today. That’s the smallest gain since
the first quarter of 2012, when the index dropped 0.1 percent.

Record home prices amid low interest rates raised concerns
of a housing bubble and prompted the government to widen a
campaign that started in 2009 to curb speculation in the
property market. Singapore unveiled new rules in June governing
how financial institutions grant property loans to individuals,
in addition to previous curbs including new taxes and higher
down-payments.

“The loan curbs are biting into the market,” said David
Neubronner, national director at broker Jones Lang LaSalle
Inc.’s residential project sales in Singapore. “The days of
easy borrowing are over.”

The new loan framework requires that lenders take a
borrower’s debt into consideration when granting mortgages, the
Monetary Authority of Singapore said June 28. Home loans should
not exceed a total debt-servicing ratio of 60 percent and those
that do will be considered imprudent, it said.

Loan Growth

The gain in housing and bridge loans slowed to 13.5 percent
in August compared with a year earlier, the slowest increase in
almost four years, according to data compiled by Bloomberg based
on information from the central bank.

Apartment prices fell 0.5 percent in prime districts in the
third quarter, more than the 0.2 percent decline in the previous
three months, the URA data showed. Those in the suburbs climbed
2.1 percent, compared with the 3.8 percent increase in the
previous quarter, according to the data.

The measures are also affecting public housing, where 82
percent of Singaporeans live. The resale price index for public
housing fell 0.7 percent in the third quarter, the first decline
since the first quarter of 2009, according to a statement from
the Housing & Development Board.

Singapore’s home sales rose in August as developers
marketed more projects, rebounding from July when they slumped
to the lowest since December 2009. Home sales increased 54
percent to 742 units in August, compared with 482 in July,
according to a separate data from the URA. Sales in August last
year were 1,427 units.

The island-state is Asia’s most-expensive housing market
after Hong Kong, according to a Knight Frank LLP and Citi
Private Bank report last year.

“The measures are working,” said Nicholas Mak, an
executive director at SLP International Property Consultants in
Singapore.